Why is there now an obsession with re-nationalisation?

[HH]

That's different though. That's the public sector pulling out of bus transport and leaving it to the market. The public sector has not pulled out of railway service provision, it has just contracted out the operational delivery of a specification set by the public sector.

It's also against a background of a continually shrinking bus industry and reductions in government (local and central) funding. In fact it would be hard to find a clearer example of apples and pears.

 

[DynamicSpirit]

I think basically it boils down to having a service run by the people for the people. Unfortunately extremists have long took over the capitalist camp and have brainwashed most people into believing their dogma.

Don't be so silly! For a start, there's nothing extremist about specifically wanting the railway in either the private sector or the public sector. Personally, I disagree with both 'ideologies'... The Tories' insistence that railways must be run by private TOCs AND Labour's insistence that it must be nationalised: I think we should be open to either solution, depending on which turns out to give the best service at the best value for money. But the word extremist generally refers either to people who want to impose their Worldview by violence, or to people who have unpleasant views that are far from the usual consensus (such as racist views). It's daft and provocative to use the word to describe people whose only 'crime' is that they disagree with you on how the railways should be run or on what the role of the market economy should be.

As for 'brainwashed' - equally silly. And also ignores that polls suggest that most of the public (outside the railway industry) want the railways nationalised, which suggests that if they believe any so-called dogma, it's the left-wing one as far as the railways are concerned.

 

[quantinghome]

I'm with you on the "for the people" point. But remember that franchises and timetables, many fares and (increasingly) the finer details of rolling stock allocation, etc, are all specified and commissioned by the DfT. That is already public.

In terms of "by the people" I'm completely non-dogmatic. If the public sector can do it best, fine. If you can shunt risk to a private sector provider for a reasonable sum, that's fine too.

We can argue about the latter point, but it is important to be clear that we have an outsourced / franchised railway, not a private railway. A true private railway would be owned and run by the private sector and it would run such services at such prices as it felt would be most profitable. That is a long way from where we are now.

I agree that we don't have a truly 'private' railway. We could never have such a thing without most of the network shutting. If there is a profitable core to the passenger network, it's very small.

I have a problem with the 'privatised' system for the following reasons:

(1) The claim (repeated today in the press and by Grayling) that privatisation has somehow transformed the railway from the 'bad old days'. There is no justification for this view. Perhaps the introduction of cheap advanced fares, but it's hard to believe a nationalised rail industry would not have done something similar. All improvements in the past 20 years are down to the massive increase in government spending, not private sector 'magic'.
(2) The current structure has too much reliance on the DfT, which should set policy and funding (the two need to be compatible of course); implementation and organisation should be left to the rail industry.
(3) Franchising doesn't seem to have achieved anything other than create artificial constraints on the industry. Things that need doing don't get done because it's too much hassle to change the franchise agreement, and you only get major improvements agree once every 8-10 years.
(4) What should be an integrated organisation is split into myriad companies creating unnecessary complexity. It kind of works on a normal day but when things go wrong or major changes are needed (electrification projects, timetable changes) it falls apart. These projects are complicated but they should be bread and butter for a railway in a modern country.

 

[HH]

(1) The claim (repeated today in the press and by Grayling) that privatisation has somehow transformed the railway from the 'bad old days'. There is no justification for this view. Perhaps the introduction of cheap advanced fares, but it's hard to believe a nationalised rail industry would not have done something similar. All improvements in the past 20 years are down to the massive increase in government spending, not private sector 'magic'.

Except that the growth started before the increased government spending, and despite the disaster that was Railtrack.

What the TOCs originally brought was a willingness to try new things and try to generate new revenue. People seem to forget that when privatisation was mooted the establishment view was that this was an industry in permanent decline. You don't invest in such industries.

As for the oft-quoted point that Thatcher was opposed to rail privatisation, no-one thinks to ask why. Was it really because she was wedded to the idea of rail as a public service? It doesn't seem likely now, does it?

Of course none of this detracts from the point that things need to change, seeing that we now have the worst of both worlds.

 

[Barn]

I agree that we don't have a truly 'private' railway. We could never have such a thing without most of the network shutting. If there is a profitable core to the passenger network, it's very small.

I have a problem with the 'privatised' system for the following reasons:

(1) The claim (repeated today in the press and by Grayling) that privatisation has somehow transformed the railway from the 'bad old days'. There is no justification for this view. Perhaps the introduction of cheap advanced fares, but it's hard to believe a nationalised rail industry would not have done something similar. All improvements in the past 20 years are down to the massive increase in government spending, not private sector 'magic'.
(2) The current structure has too much reliance on the DfT, which should set policy and funding (the two need to be compatible of course); implementation and organisation should be left to the rail industry.
(3) Franchising doesn't seem to have achieved anything other than create artificial constraints on the industry. Things that need doing don't get done because it's too much hassle to change the franchise agreement, and you only get major improvements agree once every 8-10 years.
(4) What should be an integrated organisation is split into myriad companies creating unnecessary complexity. It kind of works on a normal day but when things go wrong or major changes are needed (electrification projects, timetable changes) it falls apart. These projects are complicated but they should be bread and butter for a railway in a modern country.

They are all perfectly sensible criticisms of the current system.

I have some concerns that in a nationalised system you'd have even more of (2), not less.

Whilst recognising your point entirely on (3) - it is a major problem with outsourcing generally and is not helped by procurement law - I would also say that this has had some benefit. Thinking about franchises on a multi-year basis at least introduces some strategic thinking into the process, when Governmental decision-making can be prone to short-term thinking, as Treasury budget allocations change and ministers are reshuffled. It also protects the railway against austerity-style cuts to some extent.

 

[3141]

I think basically it boils down to having a service run by the people for the people. Unfortunately extremists have long took over the capitalist camp and have brainwashed most people into believing their dogma.

If I tell you "No, I'm not brainwashed" you may say that just shows the extent to which I am, but it may be that you are brainwashed with the opposite view, and refuse to accept a different one.

As we have seen with bus services since 'privatisation' - virtually non existent in many sizeable towns, villages no longer served, staff wages cut - with the resulting drop in standards, increase in accidents etc.
You will never get best value for the taxpayer when some private party has to take their cut.

The towns I know best are Andover, Basingstoke and Winchester, where bus services absolutely aren't "virtually non-existent". My village has a bus every 30 minutes, and I know several others where it's not true to say they're "no longer served". Some that are not served never were. The reduction in services is due to the removal of council subsidies, not private ownership.

Getting back to railways, renationalisation would not solve the problems, but it would take up a huge amount of management attention. What is needed is an examination of the problems and their causes, and a plan to address the causes, many of which come down to the infrastructure being insufficient for the numbers of trains and passengers now using them. That will require money to be spent on new and/or improved infrastructure of various kinds. There is no guarantee that changing the ownership will produce the money.

 

[quantinghome]

To succeed, passenger railways need a continuous level of investment from government. I agree that modernising our railways would be a difficult task whatever the structure. But the current system feels like it's trying to run while having its shoelaces tied together. No wonder it keeps falling over.

Renationalisation would actually be relatively easy. As has been pointed out, the infrastructure is already nationalised. Then, as the franchises expire they can be absorbed into intercity or regional 'groupings' (for want of a better word). This gradual approach would give plenty of time for the organisational structure to bed down.

 

[HH]

To succeed, passenger railways need a continuous level of investment from government. I agree that modernising our railways would be a difficult task whatever the structure. But the current system feels like it's trying to run while having its shoelaces tied together. No wonder it keeps falling over.

Renationalisation would actually be relatively easy. As has been pointed out, the infrastructure is already nationalised. Then, as the franchises expire they can be absorbed into intercity or regional 'groupings' (for want of a better word). This gradual approach would give plenty of time for the organisational structure to bed down.

The gradual approach would make it even more likely that it would be Network Rail Execs ruling the roost. Be careful what you wish for...

 

[Barn]

I've said it before, but the biggest risk with scrapping franchising is the Treasury suddenly saying "I want the railways to make 10% efficiency savings next year, please, just as we're asking other departments to do". You'll suddenly find services are cut.

 

[Tobberz]

I confess I haven't read the 700+ posts in this thread, so apologies if this has been covered:
One of the biggest objections I hear about our current state of 'privatisation' is it is run by the government, but a proportion of the money is going into the pockets of the shareholders of the TOCs. This view would hold that if the system were nationalised, that money going into their pockets would simply be invested into the network instead.

Is this true? To what extent do the TOCs actually put money into the network, as opposed to take it out.

 

[Esker-pades]

I confess I haven't read the 700+ posts in this thread, so apologies if this has been covered:
One of the biggest objections I hear about our current state of 'privatisation' is it is run by the government, but a proportion of the money is going into the pockets of the shareholders of the TOCs. This view would hold that if the system were nationalised, that money going into their pockets would simply be invested into the network instead.

Is this true? To what extent do the TOCs actually put money into the network, as opposed to take it out.

TOCs make rather small profits, only ~3%. It's the private rolling stock operating companies that take the most out of the system.

 

[gsnedders]

TOCs make rather small profits, only ~3%. It's the private rolling stock operating companies that take the most out of the system.

That's 3% of farebox revenue—even less in terms of total money going into the railways.

Like, the honest answer is for most TOCs it's at a level of "we could lease a single digit number of extra carriages per year".

 

[Gareth Marston]

TOCs make rather small profits, only ~3%. It's the private rolling stock operating companies that take the most out of the system.

Don't forget the volume of network rail work that's outsourced sticking a value on how much of that ends up as profit is harder but given that it runs into £ Billions every year.....

 

[Pigeon]

I confess I haven't read the 700+ posts in this thread, so apologies if this has been covered:
One of the biggest objections I hear about our current state of 'privatisation' is it is run by the government, but a proportion of the money is going into the pockets of the shareholders of the TOCs. This view would hold that if the system were nationalised, that money going into their pockets would simply be invested into the network instead.

Is this true? To what extent do the TOCs actually put money into the network, as opposed to take it out.

The TOCs end up as the target of such comments because they are the most "visible" to the general public, who tend to assume they're more or less all there is to it. The sentiment would be better expressed by replacing "TOCs" with "private organisations", and the criticism is of the fundamental idiocy of privatisation in general: the notion that an organisation doing something and taking a profit out of it is somehow cheaper than one doing the same thing and not taking a profit, which is like saying that you can fill the bath faster if you don't put the plug in.

 

[Railman]

I have been on for over 45 years and BR was far and away better for the Taxpayer than anything since. Even the few TOCs that have started to pay money back to goverment are not really proffitable in the true sense, because they dont pay the correct cost of Rail access. Network Rail has a £50bn debt, it gets approx £5bn a year goverment subsidy. What would the charges be IF the true cost of the network had to be recovered from the TOCs. I think the TRUE cost of Privatisation would have been felt at the ticket office long ago. Do not forget Railtracks debt had to be written off by the Tax payer before that.
I also think Nationalisation would cause JOB LOSSES because many admin/manager jobs would be instantly not required. the bureaucracy that is multiplied in every company would not be needed, and that would be serious money saving.
Whenever ANYONE mentions BR sandwiches its a sure sign they dont know anything else, and they are clutching at straws, ask them about the HST MK3 coach or class 158. I bet they wont even know what they are. Watch out for Tory press or "transport spokesmen" using that type of cliche, it a giveaway they are "on the rocks".
Does anyone actually believe BR would not have continued to evolve if it had been left alone???

 

[thenorthern]

They are discussing it on Question Time tonight, I think people look at British Rail with rose tinted spectacles too much.

 

[Barn]

the criticism is of the fundamental idiocy of privatisation in general: the notion that an organisation doing something and taking a profit out of it is somehow cheaper than one doing the same thing and not taking a profit

For that profit the DfT has traditionally transferred the revenue risk. It ends up with either a promised set of premium payments or a cap on the subsidy. The risk of whether that is viable is moved to another body. If it isn't viable, the private sector loses money and the public sector doesn't. There is value in that (especially if it is supporting capital investment) and it is only possible with an external party. That is what the profit is buying, which many people forget.

 

[DynamicSpirit]

The TOCs end up as the target of such comments because they are the most "visible" to the general public, who tend to assume they're more or less all there is to it. The sentiment would be better expressed by replacing "TOCs" with "private organisations", and the criticism is of the fundamental idiocy of privatisation in general: the notion that an organisation doing something and taking a profit out of it is somehow cheaper than one doing the same thing and not taking a profit, which is like saying that you can fill the bath faster if you don't put the plug in.

Well, it depends. The counter-argument is that a private organisation may be more innovative and therefore be able to make efficiency savings compared to the state doing the same work, and that may more then offset the profit it takes. Of course, whether that is actually true of the railways is extremely hard to tell either way.

 

[Mutant Lemming]

As for 'brainwashed' - equally silly. And also ignores that polls suggest that most of the public (outside the railway industry) want the railways nationalised, which suggests that if they believe any so-called dogma, it's the left-wing one as far as the railways are concerned.

People have been brainwashed into thinking advertising and media are essential to fund pretty much anything and everything - "Scot's Home Early..." and equally banal garbage has been indelibly etched into your brain. That ain't silly it's reality you can't escape it even if you wanted to - it's continually drilled into your head at every opportunity.

 

[swj99]

I don't think it's an obsession. I'll quite happily admit I've never been a fan of privatisation anyway, but I see more and more people becoming disillusioned with privatised industries, especially when they see how badly some of those industries perform compared to the salaries their chief execs sometimes get.

 

[HH]

There is an issue around Executive Pay in general, but railways are nowhere near the top of that league.

Plus, it bears repeating, the railways are not privatised. They are a highly specified, public service that is partially run by private companies; which is actually true of most areas that remain in the public service. This is a model that just doesn't seem to work very well (look at Prisons!).

 

[yorksrob]

There is an issue around Executive Pay in general, but railways are nowhere near the top of that league.

Plus, it bears repeating, the railways are not privatised. They are a highly specified, public service that is partially run by private companies; which is actually true of most areas that remain in the public service. This is a model that just doesn't seem to work very well (look at Prisons!).

When people talk about "privatisation" on the railway, they're not talking about some definition of "private" as would be defined by classical economists. They're talking about the model of separately run infrastructure, separately run train operating companies and separately owned trains, as set up by the railways act in 1994. That is what is being critically assessed.

 

[Andyh82]

They are discussing it on Question Time tonight, I think people look at British Rail with rose tinted spectacles too much.

Indeed, and notice it was mentioned that the TOCs make “massive profits” and Northern are running old London Underground carriages.

At the end of the day every delay on the railways is blamed on the operator, and the assumption is that if that operator is nationalised all the problems will go away.

So many parallels can be drawn between this and the pro-Brexit views pre the referendum where it was seen as a no brainer with no negatives.

 

[The Ham]

I have been on for over 45 years and BR was far and away better for the Taxpayer than anything since. Even the few TOCs that have started to pay money back to goverment are not really proffitable in the true sense, because they dont pay the correct cost of Rail access. Network Rail has a £50bn debt, it gets approx £5bn a year goverment subsidy. What would the charges be IF the true cost of the network had to be recovered from the TOCs. I think the TRUE cost of Privatisation would have been felt at the ticket office long ago. Do not forget Railtracks debt had to be written off by the Tax payer before that.

The net cost of the whole railway to the government is £4 billion a year. That includes £0.8 billion for HS2 and £3.5 billion in improvements.

Therefore, if we were to have no more infrastructure improvements then the railways would be cost nutral, even with the profits taken out by the private sector.

It is why I think that a system like TfL uses could work. In that the operations are run by a company on behalf of the government with the government taking the income having paid a flat amount for the services.

However there would be one change that I would add and that would be to allow those companies to put together business cases for services and other improvements which they could see would work and allow them to run them (akin to an open access operator) within their area. With then asked to take 50% of the profits or 50% of the net cost savings.

You would have oversight (probably at a sector level as well as at a national level), you gain the benefits of the private sector (ideas and good ways to run businesses) and you keep it mostly nationalised.

You could also have improvements done ona design and build basis, so that the government (or more likely it's agents) put it to tender, with a specification which it had to meet (for instance electrify line X between A and B to allow for a minimum of 100mph running with options to electrify to C as well D) by being involved from the initial design the contractors building it will be able to iron out some of the problems at the design stage (as designers don't always think about how something will be built). In doing so you could get more done at a lower risk.

 

[yorksrob]

Indeed, and notice it was mentioned that the TOCs make “massive profits” and Northern are running old London Underground carriages.

At the end of the day every delay on the railways is blamed on the operator, and the assumption is that if that operator is nationalised all the problems will go away.

So many parallels can be drawn between this and the pro-Brexit views pre the referendum where it was seen as a no brainer with no negatives.

And we had all of these discussions before the railway was privatised when we said that selling everything off wasn't going to solve everything. No one listened.

 

[quantinghome]

Well, it depends. The counter-argument is that a private organisation may be more innovative and therefore be able to make efficiency savings compared to the state doing the same work, and that may more then offset the profit it takes. Of course, whether that is actually true of the railways is extremely hard to tell either way.

I don't think it's that hard to tell. We've had 20+ years of evidence that private organisations are, in general, no better than what went before. Some franchises have been competent, some haven't, just like the BR sectors. A hat tip to GNER and Chiltern, but they're exceptions.

 

[quantinghome]

The gradual approach would make it even more likely that it would be Network Rail Execs ruling the roost. Be careful what you wish for...

I agree that's a risk. I think the BR sectorisation model (or a version thereof) is what we should be aiming for, with rail operators, not infrastructure managers, in the driving seat. Funding for Intercity would come from UK government; regional bodies such as TfL and TfN would fund regional services.

 

[HH]

I agree that's a risk. I think the BR sectorisation model (or a version thereof) is what we should be aiming for, with rail operators, not infrastructure managers, in the driving seat. Funding for Intercity would come from UK government; regional bodies such as TfL and TfN would fund regional services.

Unfortunately we have hardly any Managers capable of running these sectors. The old ones have retired and they haven't been replaced. We should look to move to more integrated operations, but the path is neither short, nor smooth. I do have some hopes that with an Operator now 'in charge' at NR we actually get some action on working effectively together, because so far every attempt has failed through "culture clash" (I'm being kind).

 

[Railwaysceptic]

I think people look at British Rail with rose tinted spectacles too much.

It may be true, but I doubt it, that outside this forum many people look back at B. R. with rose-tinted glasses. I certainly haven't noticed it in this forum. Those posters who refer back to B.R. do not suggest everything was perfect. Instead they - we, for I'm one of them - point out that many things today are worse than they used to be and that if B.R had been given the waterfall of tax-payers' money that is now poured into the railways, they would have achieved results far better than we have seen before or since.

The most valid criticism that can be levelled at B. R is that it failed to increase its turnover. However whether that was due to a lack of imagination and marketing skills or due to being financially hamstrung by the politicians and civil servants is a matter of opinion.

 

[jon0844]

If Labour won and took back control of the railways, and injected loads of money (the taxpayer's money of course) then I am sure things could improve.

However, there's always a fear in my head that things will be run very inefficiently and the money will seemingly disappear.

Plus, if we want fares to come down, we'll likely encourage much more growth and then you're going to have to spend even more money (after all, it will likely be the taxpayer that brings the fares down).

This year, I think Grayling is definitely going to try and come out a hero by halting the fares rise. It matters not that the fares rise is decided by the Government. It will be made to look like the TOCs wanted to up fares and he's going to stop it.